Economic Perspectives - Proposed line of amendment to International Conference Resolution (Nov. 1946)

The leadership of the British section of the Fourth International, the
RCP, was very critical of the positions adopted by the International
and they soberly analysed the real situation and tried to warn the
International of its mistakes. We leave you to read the amendment.

The leadership of the British section of the Fourth
International, the RCP, was very critical of the positions adopted by
the International. There was a minority in the RCP, referred to in the
amendment, led by Gerry Healy, that adhered to the erroneous
perspectives of the international leadership for its own factional
purposes. Ted Grant was the leading theoretician of the RCP, and he
soberly analysed the real situation and tried to warn the International
of its mistakes. We leave you to read the amendment. We have to
remember that it was this clear headed criticism of the leadership of
the RCP that pushed the international leadership to manoeuvre against,
and eventually remove, the old RCP leadership. (October 2004)

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The present epoch is the epoch of definite capitalist decline. The
general crisis of capitalism is reflected in the contradiction between
the development of the productive forces and the private ownership of
the means of production and the rational state. Capitalism fulfilled
its historic function, the development of the national state and the
creation of the world market in the decades prior to the first world
war. Capitalism can no longer serve for the development of the forces
of production. Despite the immense increase in the productivity of
labour and the continued development or technique, production on a
world scale finds itself hampered and restricted by the fetters of
private ownership of the means of production, transport and exchange,
and the national slate.

Already by 1850-1870, the basic historical role of capitalism had
been fulfilled. It had, even at that stage, become a fetter on the
development of the productive forces. That is the explanation for the
error in perspective of Marx and Engels in believing that the victory
of the proletarian revolution was imminent. However, through the
development of the world market, which gave it new resources,
capitalism revealed itself not yet as an absolute, but as a relative,
fetter on the development of the forces of production at this stage.
Marx pointed out that no society would give way to a new society until
all the productive possibilities within it had been completely
exhausted. Between 1870 and 1914 capitalism revealed itself as an
ascending economy. Of course, had the proletariat come to power (the
productive forces had already been sufficiently developed for this) the
expansion of the productive forces would have been immeasurably
greater. Nevertheless, capitalism could succeed in maintaining itself
because it still remained a relatively progressive factor.

Between 1879 and 1914, the figures of production of the most
important commodities in Germany, France, United States and Britain
showed a general tendency to rapid increase.

The first world war marked a definitive change in the role of
capitalism. The world had been divided into spheres of influence,
markets, sources of raw materials and could only be re-divided by
bloody imperialist war. The epoch of capitalist decay and of
capitalism’s death agony was ushered in. This it was that presaged the
period of wars, revolutions, uprisings and convulsions, which was clear
evidence of the insoluble impasse into which the capitalist system had
landed humanity.

The general crisis of capitalism was reflected in the fact that the
productive forces had ceased to grow with the same rhythm as in the
past.

The inevitable cycle of capitalist production now took a somewhat
different curve. No longer short slumps and long booms, with each
succeeding boom at a higher level than the last, but now an epoch in
which short booms were followed by long slumps and depressions. The
productive forces oscillated round the level of 1914, taking into
account increases of population and resources. Nevertheless, the first
post-war crisis of capitalism, in which the proletariat failed to take
power, led inevitably to a, new economic boom. The partial collapse
immediately after 1921 did not last long or have major effects. In most
countries of the world, the figures of production in 1929 were higher
than those of 1914, only to prepare for a complete collapse of the
productive forces in a way never witnessed by capitalism in the past.
The slump was one of unexampled severity, afflicting all the main
capitalist countries simultaneously, and causing frightful devastation
and chronic decline in the utilization of the productive potential.
(Japan was an exception for reasons which it is not necessary to deal
with here.)

But again, even this slump could not continue indefinitely. Where
the proletariat was paralyzed by its parties, and failed to utilize the
crisis to overthrow capitalism and take power into its own hands, a new
economic upswing commenced. In many countries of Europe this crisis was
not finally resolved until the preparations for the new slaughter of
the peoples (itself a reflection of the impasse of capitalism) was in
full swing. But on the basis of armaments preparations and the war
measures generally, economic activity even exceeded the figures of 1929
in the main capitalist countries apart from France. (See graph.)

(Graph 1)

Thus, in the downswing of capitalism it can be seen that production tends to oscillate around the level of 1919-37.*
Without being enabled to gain the steady rhythm of increase in the
decades prior to the first world war, when each crisis was succeeded by
an enormous upswing on a higher level of the productive forces.

World War II, a further proof of the death agony of capitalism, has
resulted in the frightful destruction of men, of the productive forces,
in the disorganisation and disintegration of production in Europe and
Asia, such as has never been exampled in history. Imperialism and
capitalism have thus shown the barbarism into which their continued
existence will plunge mankind. In opposition to the reformists and
Stalinists, who seek to lull the masses with a perspective of a new
renaissance of capitalism and a great future for democracy, the
resolution of the International Pre-Conference is one hundred per cent
correct in emphasizing the epoch of decline and collapse of world
capitalist economy. But in a resolution that seeks to orientate our own cadres on immediate
economic perspectives – from which the next stage of the class struggle
will largely flow, and thus our immediate propaganda and tactics – the
perspective is clearly false.

The present crisis and low level of production, is not
the economic crisis as understood by Marxists in the classic sense. It
is a crisis of “underproduction” arising from imperialist concentration
of productive forces for war and from war destruction itself. It
reflects itself in the lack of capital goods, lack of consumers’ goods,
and lack of agricultural goods. Just the opposite of an economic crisis
of capitalist overproduction as understood by Marxists.

The frightful famines which have stricken the peoples of the entire
world, the disorganisation and decay of Europe, are indications of the
disruption of the capitalist system. These could easily have led to the
destruction of capitalism and the organisation of socialist production
on an all-European and all-Asiatic scale, were it not for the weakness
of the revolutionary party and the capitulation of the mass
organisations of the working class. For the second time in a generation
capitalism has been enabled to gain a new breathing space.

The theory of spontaneous collapse of capitalism is entirely alien
to the conceptions of Bolshevism. Lenin and Trotsky emphasized again
and again that capitalism will always find a way out if it is not
destroyed by the conscious intervention of the revolutionary party
which, at the head of the masses, takes advantage of the difficulties
and crises of capitalism to overthrow it. The experience of World War
II emphasizes the profound correctness of these conceptions of Lenin
and Trotsky.

Given the prostration of the proletariat through the betrayal of its
mass organisations, the cyclical upswing of the productive forces, the
wearing out of machinery, the slashing of wages, leads to an absorption
of surplus stocks and the restoration, or partial restoration of the
rate of profit. Thus, the way is prepared for a new cyclical upswing
which in its turn lays the basis for an even greater slump. As Trotsky
wrote of the world slump:

“The ruling classes of all countries expect miracles
from the industrial upswing, the speculation in stocks which has
already broken out is a proof of this. If capitalism were really to
enter upon the phase of a new prosperity or even of a gradual but
persistent rise, this would naturally involve the stabilization of
capitalism and at the same time a strengthening of reformism. But
there is not the least ground for the hope or fear that the economic
revival, which in and of itself is inevitable, will be able to overcome
the general tendencies of decay in world economy and in European
economy in particular. If pre-war capitalism developed under
the formula of expanded production of goods, present day capitalism,
with all its cyclical fluctuations, represents an expanded production
of misery and of catastrophe. The new economic cycle will execute the
inevitable readjustment of forces within the individual countries as
well as within the capitalist camp as a whole, predominantly towards
America and away from Europe. But within a very short time it will
place the capitalist world before insoluble contradictions and condemn
it to new and still more frightful convulsions.”

No matter how devastating the slump, if the workers fail, capitalism
will always find a way out of its economic impasse at the cost of the
toilers and the preparation of new contradictions. The world crisis of
the capitalist system does not end the economic cycle but gives it a
different character. The theory of the Stalinists put forward in the
last world crisis that this was the last crisis of
capitalism from which it would never recover, has been revealed to have
been entirely un-Marxian. There is a grave danger that this theory will
be revived in our own ranks today.

After World War I the capitalists were faced with large if
inexperienced revolutionary parties striving to take advantage of the
capitalist crisis in production in order to overthrow capitalism. This
further aggravated the chaos, and rendered difficult the capitalist
recovery. Despite this, however, production was largely restored. (See
appendix.)

If the Stalinist parties had been genuine revolutionary parties, the
capitalist class would now be faced with an entirely different
perspective in economy as well as politically. The proletariat in
France would have paralyzed the attempt of the capitalists to restore
production at the expense of further sacrifices and burdens on the part
of the masses. But the two traitor organisations of the proletariat are
straining every nerve to prevent, frustrate and sabotage any struggle,
economic and political on the part of the proletariat.

Meanwhile, with the weakness of the parties of the Fourth
International, which remain small sects at this stage, the capitalists
have been enabled to find a way out of the collapse and decline of
economy. This has prepared the way in Western Europe for a steady and
fairly rapid recovery.

If a conflict develops between Stalin and Western European
capitalism and the Stalinist organizations are used to disrupt and
force concessions by means of mass strikes, the situation can
deteriorate for the capitalists overnight. Even the assistance of
American finance would not and could not prevent the crisis that would
follow.

The specific position taken by the International Pre-Conference and
supported by the Minority of the British Party, that the Western
European countries – France, Holland, Belgium and others – will remain
on a level approaching stagnation and slump, and cannot reach the level of production attained pre-war, is entirely false. The Pre-Conference resolution says:

“This restoration of economic activity in the
capitalist countries hit by the war, and in particular in the countries
on the European continent, will be characterised by its
particularly slow rhythm and these countries will thus remain on a
level approaching stagnation and slump.”

Eastern Europe in particular, under the control of the Stalinist
bureaucracy, will undoubtedly recover and even increase its productive
resources more rapidly than after 1914-18. It is impossible for
Anglo-American imperialism and the bourgeoisie of Western Europe to
allow complete stagnation and decline on one half of the Continent,
while economic activity will develop in the other half under the
domination of the Stalinist bureaucracy.

However, apart from these political considerations, there are the
laws of capitalism which themselves ensure the upswing of economy and
make a new “boom” inevitable. Particularly in view of the fact that
this crisis is not a crisis of overproduction and that the capitalists
are not being attacked in Western Europe by the mass organisations, but
receive the direct assistance and support of Social Democracy and
Stalinism, a cyclical upswing is inevitable. It is not excluded that particularly for Western Europe (with the exception of Germany and Austria) the productive figures can even reach and surpass the pre-war level in the next period.
Even in Germany, depending upon the relationship between the
imperialists and Russia, a greater or lesser revival will take place,
though here because of the conflict between the powers and the division
and occupation of Germany, it is impossible that pre-war figures will
be reached in the next period.

All the factors on a European and world scale indicate that
the economic activity in Western Europe in the next period is not one
of “stagnation and slump” but one of revival and boom.

The main feature of capitalist crisis (“stagnation and slump”) as
revealed for example by the classic crisis of 1929-33 which assumed
unexampled scope and severity on a world scale, was overproduction of
capital goods, consumers goods and agricultural produce. The industrial
crisis was thus supplemented with a simultaneous agrarian crisis. The
economic revival which followed the last world slump, as always, was
achieved by the destruction and deterioration of capital goods, the
deterioration and destruction of consumers’ stocks, the cutting down of
the areas sown with crops, etc. Though this involved immeasurable
misery and suffering for the toilers, nevertheless, particularly with
war preparations, by 1937-38 the production figures exceeded even the
record years of 1928-29 in most countries of the world. The destruction
wrought by the war has achieved similar results to those which the
capitalists achieve when they consciously set out to destroy wealth in
a period of crises of overproduction.

The classic conditions for boom are present in Europe today. A
shortage of capital goods; shortage of agricultural produce; shortage
of consumers’ goods. The shortages impose new miseries for the masses
and new strains on the system. These conditions engendered by willful
destruction and the normal processes of decay of capitalist slump are
here produced by the devastation and havoc of totalitarian war. This
devastation did not lead to the overthrow of the system through the
victory of the proletariat. In the same way as recovery follows a slump
which does not lead to the overthrow of the system, so the restoration
of the productive forces will follow the present chaos, even on a
capitalist basis.

However, such a recovery, as already stated in the citation from
Trotsky, cannot lead to a blossoming of the economy of capitalism. A
new recovery can only prepare the way for an even greater slump and
economic crises than in the past.

The Stalinists and Social Democrats have largely persuaded the
working class to accept the burden of reconstruction with the cries of
“Production! Production!” With this they have undoubtedly had a certain
success among the broad masses. The Fourth International will only
discredit itself if it refuses to recognise the inevitable recovery,
and it will disorientate its own cadres as well as the broad masses by
predicting a permanent slump and slow rhythm of recovery in Western
Europe, when events are taking a different shape. (See appendix.)

The argument of the comrades of the American SWP, which has been
echoed by the Minority of the British Party, that only after the
proletariat has been decisively defeated would American imperialism
give loans to assist the recovery of Western European capitalism, has
already been demonstrated to be a false one. The proletariat has not
been defeated, but loans have already been given.
Equally false is the argument that only if the proletariat is
decisively defeated can economic recovery and revival take place. Such
an argument lumps together political-economic problems visualising an
immediate reflection of one upon the other. Undoubtedly, a decisive
defeat of the proletariat gives the bourgeoisie stability and confidence. But unless the economic preconditions for a boom are present, a boom would not necessarily follow even in that event.
It is not a law of the development of capitalism that only the defeat
of the proletariat in a revolutionary situation can lead to a boom, any
more than a slump automatically leads to a revolution. History teaches
us that capitalism, even in its death agony, recovers after a slump,
despite the revolutionary possibilities, if the proletariat is
paralyzed or weakened by its organizations and rendered incapable of
taking advantage of its opportunities.

After the revolutionary wave of World War I had been stemmed by
Social Democracy, capitalism was enabled to revive at the expense of
the intensified exploitation of the working class. The first post-war
revolutionary wave of World War II has been stemmed and paralyzed by
Social Democracy and Stalinism. Economic revival is taking place before
our eyes in most countries of Western Europe and Britain. Not only
this. The bourgeois state machine in the Western countries, which had
been disrupted and shattered after the fall of Hitler, has gradually
been rebuilt on the basis of bourgeois democracy. A precarious
“stabilization” of the bourgeois state and the restoration of the
economy from the position of almost complete disruption and chaos has
taken place. The rhythm of recovery is proceeding at a fairly rapid
pace in all of Western Europe, apart from Germany.

The paralysis of the proletariat, through its organisations, has
allowed the bourgeois the opportunity to recover control of its
economy. It does not follow from this that the proletariat is defeated.

In reality, ebbs and flows of the workers’ movement, together with
ebbs and flows in the economy will take place, and not necessarily in
direct dependence one upon the other.

Economic recovery is not necessarily dependent upon a definitive
defeat of the proletariat: revolution is not necessarily dependent upon
economic decline.

Economic revival is not necessarily a debit for the revolution. On
the contrary, with the paralysis of the proletariat, the harnessing and
knitting together of the masses in industry will strengthen their
confidence and fighting capacity. It can prepare the way for big
struggles (America 1936) which can pose again the political questions
in a clear and sharp fashion. The economic revival, in any event, can
last only a few years and the new slump again pose before the workers
the treachery of the Stalinist and Social Democratic leaders who
shouted “Production” . . . and produced unemployment and want because
of “overproduction.” While the proletariat can be lulled and reconciled
by its organizations in a period of universal shortage, to accept the
yoke of increased slavery and the burdens of increasing production,
they will find it intolerable when they see the impasse into which
these sacrifices have led them. But only if the Fourth
Internationalists have carefully explained the process in a theoretical
fashion, can we reap the benefits from the advanced section of the
working class. Only on that basis will it be possible to talk of leadership of the masses.

The new slump will reveal once again, as did the wars and the
previous slumps, the degeneration and chronic crisis of world
capitalism. Great class battles, revolution and civil war will be on
the order of the day.

The definitive decline of Europe, already begun in 1914, has been
aggravated in the succeeding decades, and world war II has put its seal
on this decline. While cyclical upturns will take place and are taking
place at the present time, there can be no real growth of the
productive forces as in the past. The chronic crisis and death agony of
capitalism will once again be revealed in its full scope when the
catastrophe of the peace will be added to that of the war; the paradox
of poverty and plenty, of idle factories and idle workers, of starving
populations while food is rotting, of the burdens of the new rearmament
programme, will pose insistently the need for the reorganisation of
society in the consciousness of the proletariat. The program me of the
Fourth International will become the banner of the European and world
proletariat.

Appendix to Proposed Amendment to Economic Perspectives

Appendix

The first world war was followed by a boom, not by a slump, in accordance with the laws of capitalist economy.

Immediately following the war, the overall production index for the
whole of Europe excluding the USSR, stood at 62 per cent of the 1913
figures. Production during 1919 and 1920 rose steadily to 79 per cent
of the pre-war figure at the end of 1920, the average indices for 1919 and 1920 being 66 per cent and 74 per cent respectively of the 1913 figure.

The following figures of the basic commodities production in the
main countries and graphs of French coal and steel production give an
indication of the fairly rapid tempo of recovery in Western Europe,
despite the existence of mass Communist Parties and the strivings of
the young Soviet Republic under Lenin and Trotsky to extend the
socialist revolution.

It is important to note that after the short slump of 1921, during
which year the economic recovery was further hampered by the bitter
class struggles, the economy of Europe and the world rose steadily
(apart from slight set-backs) right up until 1929. (see graph 1).

It is important to note that after the short slump of 1921, during
which year the economic recovery was further hampered by the bitter
class struggles, the economy of Europe and the world rose steadily
(apart from slight set-backs) right up until 1929. (see graph 1).

Theoretical understanding would postulate that given the tremendous
destruction of capital goods in the course of the war, and the dearth
of consumer goods that resulted from six years of depreciation, the
inevitable result will be a post-war boom. When we add to these
economic factors the political relations which resulted in the
paralysis of the proletariat by Social Democracy and Stalinism, and the
weakness of the Fourth International, it is clear that the economic
recovery will parallel, if not exceed that of the past post-war period.

This theoretical postulate has been conclusively proved in that the level of industrial production in France has risen from 33 per cent in August 1945 (see “Economist” August 8th 1945) to 60 per cent in March 1946 (see “Economist”, March 23rd 1946) to 80 per cent in June 1946 (see “Economist” June 28th 1946).

A comparison of the tempo of recovery of industrial activity
of the two post-war periods is now partially possible. The following
graphs, showing the average monthly output of coal, and pig iron in the
two post-war periods give an indication of the relative tempo of
industrial recovery.

All statistics (unless otherwise mentioned) are official League of Nations figures.

(Graph 2)

Top: French pigiron production 1919-20.

Below: French coal production 1919-20.

Footnotes:

*
Owing to exceptional conditions produced by the war, German production
virtually collapsed and American production soared to record heights.